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đź“°AI Start-up, Hidden Tarrif, Positive Consumer Sentiment

Three stories on Indian markets that you can't miss.

April 10, 2025

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Good afternoon, 

Welcome to the best way to stay up-to-date on India’s financial markets. Today, we’re discussing

  • Bangalore-based Ziroh Labs has unveiled a breakthrough that could reshape the nation’s approach to AI,

  • Modi agrees to dismantle the inspection bureacracy,

  • and an RBI consumer sentiment survey shows consumers believing inflation will drop.

Then, we close with Gupshup, a round-up of the most important headlines.

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—Shreyas, [email protected]

Market Update.

India’s Hidden Tariff: Inspections.

It isn’t just Americans who are fed up: factories crafting Louis Vuitton fashions, manufacturers of everyday kitchen appliances, and countless other production lines worldwide are impatiently waiting for the notorious Indian quality inspector.

What are these inspections? For Modi to clinch a swift deal with the US, he must take bold steps; chief among them is dismantling the bureaucratic “Inspector Raj” that his administration has weaponized under the guise of job creation while actually shielding entrenched local interests. Such inspections, once intended to prevent substandard Chinese imports from saturating local markets, have ballooned from roughly 100 products five years ago to nearly 800 across more than 100 sectors. This sprawling apparatus, overseen by the Bureau of Indian Standards, now routinely chokes global supply chains with its red tape.

While the original intent may have been quality control, the reality is that these mandates have morphed into a form of protectionism. The polyester in Nike gym shorts and the Vietnamese steel for automakers must all earn a BIS stamp, contingent on a time-consuming site visit by an Indian inspector and frequent re-certification. The dispute even made headlines when the US traded barbs with India over its polyethylene quality-control order, calling for acceptance of self-certification or results from internationally accredited labs.

This revival of the Inspector Raj isn’t just an administrative headache but rather a relic of a past era. It harks back to a time when inspectors from excise and labor departments roamed small factories, demanding bribes and stifling growth. Those old impulses may have subsided with economic liberalization in the 1990s, but they have now returned in full force to hamper industries like footwear and garments.

Just a few pros: Critics argue that scrapping this cumbersome quality-control regime could be a game changer. By dismantling these restrictive orders, Modi could narrow the $40 billion (â‚ą3.4 trillion) trade surplus with the US and, when combined with increased purchases of oil and defense hardware, potentially secure lighter tariff penalties from Washington. This move would also signal a commitment to a more open trade policy which is a prerequisite to attract multinational firms looking to diversify away from a China-centric supply chain.

Domestic constituencies from farmers to billionaires resist sweeping reforms, particularly in sensitive areas like food standards. But for nearly every other sector, the path forward seems clear. Abolishing the weaponized quality-control orders would not only reduce production bottlenecks and elevate India’s standing in global manufacturing but also pave the way for joining broader, labor-intensive production networks across Asia. Instead of sidelining imports of polyester or viscose fiber, policymakers must embrace a pragmatic, outward-looking strategy.

An AI Startup Claims to Have Solved GPU Issues.

Bangalore-based Ziroh Labs has unveiled a breakthrough that could reshape the nation’s approach to AI. In collaboration with IIT Madras, the company developed Kompact AI — a framework designed to run large AI models on the everyday CPUs found in standard computers, rather than depending on high-end GPUs like those offered by Nvidia. This innovation comes at a time when access to premium computing chips is a significant barrier for Indian developers, who often struggle to afford or obtain the latest technology.

The technology: By shifting the focus to inference — the process of operating AI systems after they’ve been trained — Ziroh has managed to optimize some of the leading AI models to run on personal computers. During a recent demonstration, the team showcased their solution on a laptop powered by an off-the-shelf Intel Xeon processor, successfully querying models such as Meta’s Llama 2 and Alibaba’s Qwen2.5. This approach, which was validated by industry giants like Intel and AMD promises to democratize AI development by significantly lowering the hardware cost barrier.

Industry observers see this innovation as a potential game changer. The broader concern in India’s tech community was that only those with access to expensive, GPU-powered resources could tap into the full potential of AI. At a time when international competitors are leveraging cost-effective AI solutions, as seen with China’s DeepSeek, Kompact AI represents a major step forward for India. By enabling AI innovation to flourish on widely available hardware, the technology could help close the AI divide and accelerate local research and deployment, setting the stage for a more inclusive and dynamic AI ecosystem in the country.

Consumer Sentiment Is Positive Across the Board.

In an RBI sentiment survey spanning over 6,000 respondents across 19 major cities, the median inflation perception eased by 50 basis points to 7.8 percent marking the lowest reading since the pandemic began. The polls also noted similar downward adjustments in inflation expectations for both the three-month and one-year horizons, with moderations of 40 and 50 basis points respectively. In these surveys, the trend's direction matters more than the absolute figures, and the consistent easing signals growing consumer confidence.

Earlier yesterday, softer price pressures contributed to the RBI’s decision to trim interest rates for the second consecutive policy meeting. Governor Malhotra indicated that with inflation steadily approaching the central bank’s target of 4 percent in the new fiscal year, further rate cuts remain a likely prospect. 

This monetary easing is now coupled with an increasingly optimistic outlook on the labor market. Indian consumers are not only more upbeat about future job prospects but also report a renewed sense of optimism regarding their personal income, following several rounds of cautious sentiment. The aggregate response points to a broader base of confidence among households, suggesting that a supportive economic environment may be on the horizon as inflation continues to recede.

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Gupshup.

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See you Friday.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.